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Examining agriculture as one of the main trade-related sectors affecting emissions from the developing world
levels, increasing globally to 17 percent (US$1.90–US$3.20 PPP per day) by 2040 from only 9.2 percent in 2017. The reduction in poverty is most significant under a free-trade scenario—dropping to 2 percent (US$3.20–US$5.50 PPP per day) (Hu et al. 2021).
Examining agriculture as one of the main trade-related sectors affecting emissions from the developing world
The export structure of most low- and middle-income countries is based on agriculture, signaling agriculture’s critical importance for jobs, income, poverty reduction, and government revenue. However, the Intergovernmental Panel on Climate Change (IPCC) estimates that land-use change—for example, conversion of forest into agricultural land—adds a net 1.6 ± 0.8 gigaton of carbon per year to the atmosphere, which is similar to a quarter of emissions from fossil fuel combustion and cement production (Watson et al. 2000). The expansion of large-scale commercial agriculture is often viewed as the culprit, but the collective emissions from subsistence farmers and outgrowers6 also contribute significantly. Moreover, while agriculture exacerbates climate change (through deforestation and in other ways), it also suffers from the adverse effects of climate change—among others, growing water scarcity. This section examines the problem and provides suggestions on how trade can help to increase agricultural output sustainably while reducing land-use change.
Impact of trade on land-use change and emissions, especially in low-income African countries
Since the advent of agriculture, natural forests and habitats have been cleared to engage in crop and animal production, but these changes in land use are contributing to growing emissions. In more recent periods, clearing for industrial activities has also played a role, but not at commensurate levels. The United Nations Climate Change Secretariat defines land use, land-use change, and forestry (LULUCF), also referred to as forestry and other land use, as “a greenhouse gas inventory sector that covers emissions and removals of GHGs [greenhouse gases] resulting from direct human-induced land use such as settlements and commercial uses, land-use change, and forestry activities.”7 The impacts of LULUCF on climate are direct—changing the global carbon cycle. LULUCF activities either add CO2 to the atmosphere or remove it, thus bringing about changes in biodiversity and climate patterns.
Since international trade involves mainly commodities produced where resources are most abundant, several countries clear forests to enable productive activities destined for export. On average, the harvest of one-fifth of global cropland area was destined for export in the 2000s, and almost all growth in cropland area was for internationally traded crops (Kastner, Erb, and Haberl 2014). Demand for the final and intermediate products made with forest-risk commodities is global, but production and associated land-use change are geographically decoupled from the associated demand (Henders, Persson, and Kastner 2015).
Commodities whose production entails deforestation vary between regions and countries; in the case of Africa, they are largely livestock meat and some cereals. Specifically, production of cattle meat contributes just over a quarter, and the remainder is from the production of a diverse mix of other cereals, roots and tubers, pulses, and other oilseeds (Pendrill et al. 2019). In Latin America, the production of cattle
meat accounts for more than 60 percent of embodied deforestation. In Asia and Pacific, the production of palm oil and forestry products each accounts for a third of embodied deforestation. For example, in Argentina, Brazil, Indonesia, and Malaysia, the production of soybeans and palm oil during the 1990–2014 period led to a forest loss of more than 60 million hectares.
The problem: Increasing deforestation caused by fuel agricultural exports despite suboptimal productivity per acreage
Tree cover loss has been significant in Africa, with the remaining primary forest cover mainly in the Democratic Republic of Congo and distributed sparsely in parts of West Africa and East Africa. Between 2001 and 2019, tree cover loss accelerated in Africa. The Democratic Republic of Congo experienced the greatest loss, ranking sixth in the world in terms of forest cover loss, losing 14.6 million hectares over the past two decades. The Democratic Republic of Congo is followed by Madagascar (3.89 million hectares) and Mozambique (3.29 million hectares), Côte d’Ivoire (3.03 million hectares), and Tanzania (2.51 million hectares). (The Russian Federation had the highest relative tree cover loss in the world, equivalent to 64.0 million hectares, which represented 8.4 percent of tree cover in 2000.) Forests present a significant stock of global carbon, accumulated through the growth of trees and increase in soil carbon. Tampering with primary forests—converting primary to managed forests, illegal logging, and unsustainable forest management—results in greenhouse gas emissions and can have additional physical effects on the regional climate (IPCC 2019).
In the past decade, the value of the poorest countries’ oil and gas exports has almost halved, whereas agriculture and textile manufacturing exports have increased gradually (figure 2.4). In 2019 oil and gas extraction exports were US$45.3 billion, down from US$85.1 billion in 2012. Agriculture and textile manufacturing exports
FIGURE 2.4 Categories of Exports from the Poorest Countries to the world (mirror data), 2012–19
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Agriculture Manufactured textiles Forestry Recycling
Source: International Trade Statistics (COMTRADE) data. Fishing Oil and gas extraction Electricity, gas, and hot water supply Mining Manufactured food
both increased by about US$5.0 billion, while average forestry exports amounted to US$1.8 billion over the same period. In Sub-Saharan Africa, land is used mostly for agriculture; between 1990 and 2018, agricultural land grew by 4 percent, while forest area declined by almost the same percentage.
Africa is the only region where emissions due to agriculture and related land use are higher than those due to energy. Africa remains an agricultural powerhouse, and recent investments in large-scale commercial farming are having an adverse effect on the environment. By 2013, the value of agricultural production in Africa had tripled compared to levels in 1980; growth was almost identical to or lower than that of South America, but comparable to that of Asia (NEPAD 2013). Between 1990 and 2017, Africa’s agricultural emissions ranged from 1.7 million to 1.8 million gigagrams, followed by South America, which saw a substantial reduction over the same period— from 1.8 million to 1.1. million gigagrams. Globally, total emissions not associated with land use have been growing (except for Europe), driven largely by energy, especially in low-income food-deficit countries and South Asia. Industrial processes have also been adding increasingly to CO2 emissions in these same regions. Europe is the only region exhibiting a decline in both total emissions (excluding land use) and energy.
Although more land is being allocated to agriculture, yields are still very low, signaling that current output may have been achievable with less land-use change. The increase in agricultural output in Africa has been driven by the expansion of cropland rather than an increase in yields. For many crops, yields in Africa remain far below the averages obtained elsewhere in the world. For example, in Sub-Saharan Africa, the area of land dedicated to cereal production has been increasing since 1960, but up to 2017 yields did not grow by a commensurate amount (figure 2.5). More specifically, yields did not even double (growing by a factor of 1.8), while land hectarage almost
FIGURE 2.5 Cereal Production versus Yield on Harvested land in Sub-Saharan Africa, 1960–2016
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0 19601962196419661968197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016 Cereal yield Land used in cereal production
Source: Food and Agriculture Organization, Food and Agriculture Statistics Division (FAOSTAT) database. 120
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tripled (growing a factor of 2.75). Additional analysis by the International Food Policy Research Institute, using Food and Agriculture Organization data, shows that production on the African continent increased fourfold between 2002–05 and 2012–15, while harvested area only increased by a factor of 1.5. Yields doubled in more recent years. However, there is a large regional disparity, with the increase in crop yields and production concentrated in East Africa rather than West Africa. These findings highlight the need to pay attention to regional factors that are constraining or contributing to higher yields.
Moreover, cropland expansion is projected to continue, so innovative solutions to transform agricultural farming while mitigating land-use change are urgently needed. Most agroeconomic models project that total cropland area by 2050 will be 10–25 percent larger than in 2005 (under constant climate). Across all models, most of the cropland expansion will take place in South America and Sub-Saharan Africa. Assédé et al. (2020) and Fenta et al. (2020) add that the most drastic land-use change in the Sudanese and Zambezian regions is the conversion of woodlands to arable land. The question arises how much less land-use change might have been necessary to achieve current levels of output if global average yields had been achieved for the main crops in these regions. With innovative technologies in farming, sustainable techniques, and new cereal strains, for example, hectarage for cereal production need not have tripled, as seen in figure 2.5. This is an avenue where trade can provide the solutions.
Trade liberalization can promote land-use displacement in countries with more established and efficient “environmentally friendly” production systems. Closer examination of trade between Costa Rica and the United States reveals how land use has been spatially redistributed within Costa Rica. Land-use displacement (for cattle production) from Costa Rica to the United States helped to alleviate global environmental pressure. In this example, the United States was a more efficient cattle producer, in that it had a longer agricultural history and an intensive production system. Granted, the initial deforestation to clear land for farming in the United States was not ideal. However, when it came to trade between the two countries, the United States was more efficient at the time and did not need to deforest further. In contrast, Costa Rica was being strained. Jadin, Meyfroidt, and Lambin (2016) find that the contraction of pastures was equivalent to about 80 percent of Costa Rica’s reforestation. As pastures were replaced by forests, whose exploitation has been increasingly regulated, Costa Rica has met its domestic demand through production abroad, exporting less meat and importing more wheat, maize, soy products, and rice since the mid-1980s and bovine products since the mid-2000s. Notably, Costa Rica’s transition was complemented by enabling policies and regulations on deforestation.
However, this displacement is only positive when it moves into more environmentally friendly sectors—although trade liberalization favors the most productive localization in the sector under consideration, the localization could have smaller or larger environmental impacts. In the positive example above, cattle ranching moved from biodiversity-rich Costa Rica to the United States, not because of lower environmental impacts but because of higher productivity in the meat sector. In Europe, trade liberalization would shift meat production (and feed for cattle) toward Latin America, entailing larger environmental losses. Trade affects the environment through three
channels: (1) a real income effect, which is detrimental to the environment (lower meat prices will increase demand, damaging the environment); (2) an efficiency effect, which is beneficial to the environment (more efficient production can reduce the negative impacts by lowering energy consumption); and (3) carbon leakage or externality effects, which can be beneficial or detrimental to the environment (positive if production moves from Costa Rica to the United States, negative if it moves from Europe to Brazil).
Trade can foster changes in consumption (and thus demand) to more environmentally friendly products, thus reducing potential land-use change. Changing patterns of demand and consumption is a long-term exercise but necessary to shift production toward more environmentally friendly goods and services. Over the past century, the increasing world population and the shift in global diets toward vegetable oils and animal products have increased the demand for agricultural commodities. To meet this demand, the continuing trend is for forestland to be converted into crop fields or pasture, especially in low- and middle-income countries. This trend is unsustainable. Demand- and consumption-side management is very important because it has the potential to mitigate climate change by reducing emissions from production; switching to consumption of less emission-intensive commodities, for example, plantbased foods; and making land available for CO2 removal (land that would otherwise have been used for farming). In addition to gains in direct mitigation, lowering meat consumption, primarily of ruminants, and reducing waste further reduce water use, soil degradation, and pressure on forests and land used for feed, potentially freeing up land for mitigation purposes (Tilman and Clark 2014). Several trade policy options are available to “awaken a carbon footprint consciousness in consumption,” which are discussed in chapter 5.
Trade measures can promote sustainable agricultural management by fostering technological innovations that can drive up yields while reducing the potential for adverse land-use change. Villoria (2019) concludes that technological progress in Asia and Sub-Saharan Africa would reduce the cropland area in these regions as well as in the rest of the world. Moreover, large-scale application of climate-smart technologies in Africa and Asia could enhance food security. Hertel, Baldos, and Fuglie (2020) find that sluggish growth in farm productivity in Sub-Saharan Africa has brought to the fore the key role of agricultural technology in alleviating future food insecurity and that, toward 2050, virtual technology trade will be the most important vehicle for reducing nonfarm undernutrition in Africa (Hertel, Baldos, and Fuglie 2020). More specifically, given that rice farming produces a significant amount of emissions, disruptive technologies are required. For example, the United Nations Environment Programme has been working with the Shanghai Agrobiological Gene Center to develop rice strains that are drought resistant and do not need to be planted in paddies (UNEP 2021). Generally, technological advancement in the agriculture sector, especially in the making and application of fertilizers, will be necessary to mitigate emissions and adapt to climate change. Countries can increase agricultural productivity in a smart, sustainable manner using existing land—deforestation is not necessary provided yields improve. Moreover, the total area of land that is currently under cultivation may be reduced, paving the way for forestation.
Reducing tariffs on technological goods and liberalizing regulatory policies can facilitate access to agricultural digital technologies and services from advanced economies. Improving digitalization implies that farmers have access to better data, allowing them to make climate-informed decisions, drive up yields, reduce waste, and
contribute to poverty reduction in low- and middle-income countries. Along with the large foreign investments being attracted to the poorest countries, which could entail adverse land-use changes, commensurate investments are needed in agricultural research for crop and livestock improvement, agricultural technology transfer, inland capture fisheries, and aquaculture. Additionally, better nitrogen management can help to reduce emissions significantly, depending on soil and weather conditions. Crop farmers need to ensure that the form, type, amount, and timing of nitrogen being applied will not result in significant losses because of denitrification, volatilization, or leaching (Yara International ASA 2021). Further, trade barriers should not impair the movement of agricultural specialists and related professionals, which would hamper the exchange of knowledge and capacity building of farmers.
Land-use change has the potential to affect neighboring countries adversely, especially agricultural production, so regional solutions are necessary. For example, the Congo Basin is home to 80 million people, and the rain forest plays a role in regulating rainfall patterns across other parts of the continent as well. But with increasing losses of forest cover, nearby areas such as the Horn of Africa—for instance, Ethiopia and Somalia—have recently been experiencing droughts. Other factors are probably at play, such as El Niño and climate change, but deforestation within and adjacent to these countries is significant. Country-specific efforts are necessary but not sufficient. For example, South Africa is exploring its potential in green goods (an integrated market for greener technologies, including seeds and fertilizers) and services (movement of agricultural specialists who can help to improve land management).
However, regional liberalization efforts, such as the African Continental Free Trade Area (AfCFTA), can act as an institutional anchor to lock in some of these country-specific efforts that are aligned with fostering sustainable growth. Initially, intra-AfCFTA trade will involve mainly agricultural goods and services. However, agriculture is highly vulnerable to climate change, as higher temperatures will result in lower yields, higher prevalence of diseases, and extreme events such as droughts and flooding. Agriculture also uses huge amounts of water, which is becoming scarcer. Thus, for AfCFTA to be effective, it needs to promote sustainable trade, enabling businesses to adapt effectively to climate change, while minimizing the impacts on the environment.
Environmental provisions in trade agreements can be effective in improving environmental welfare, but need to be specific and legally binding. Recent research shows that countries with stringent environmental regulations particularly benefit from greener trade, enhanced by environmental provisions in preferential trade agreements. Regarding efficacy, Abman, Lundberg, and Ruta (2021) find that the inclusion of deforestation provisions in trade agreements reduced forest loss by 7,571 square kilometers from 1960 to 2020, the effects being most pronounced in ecologically sensitive areas. These provisions limited the expansion of agricultural land but not total production, indicating that agricultural intensification on existing land may still have occurred. Environmental provisions are becoming more diverse and extensive but, for most low- and middle-income countries, provisions lack specificity. The Comprehensive Economic and Trade Agreement between Canada and the EU is a great example of a climate-friendly agreement, with specific provisions (Brandi et al. 2020). As for international forums, the Kyoto Protocol on land use needs to be revised and updated because it requires further clarification and practical, effective
